Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.

With oil closing at just over $106 as ODAC went to press, the US Democratic presidential candidates this week displayed either spectacular ignorance or breathtaking cynicism in their pronouncements about the soaring cost of a barrel – up tenfold in a decade. Both essentially blamed Big Oil, with never a word about depletion. It is difficult to know which is scarier: that they might actually believe this rubbish, or that they understand the situation perfectly well, and are lying through their electioneering teeth.

In Britain the energy politics were no less high-minded, as the government sought yet again to weasel out of commitments to raise renewable generating capacity to 15%, and with further confusion on UK coal policy. But the government has only itself to blame for its biggest problem in electricity generation: the retirement of around 20GW of coal and nuclear capacity (25% of the total) over the next decade or so was entirely predictable – and indeed predicted. The age and decrepitude of the nuclear fleet is of course no secret, and the EU’s Large Combustion Plant Directive mandating higher emissions standards was passed way back in 1988. Other EU members managed to clean up their electricity generation by the mid 1990s. After 10 years of New Labour, asleep at the switch would be the generous interpretation.

Good sense this week came from scientists at the Royal Society. Whatever your view on carbon capture – silver bullet or dangerous diversion – it clearly makes sense to insist that no new coal fired power station will be allowed to operate without it, within a legally defined period of time. Then the choice is stark: either CCS is made to work, or we have to close (even more) coal-fired power stations and deal with the consequences. That ought to concentrate the minds of both investors and legislators. If it transpires that CCS requires a higher carbon price, then it would be up to government to organize it. But that would be far too much like a tough decision and hard deadline, so don’t hold your breath.

The UK’s default response to the looming hole in generating capacity will no doubt be to build yet more gas-fired power stations. The risks of such a ‘strategy’ were highlighted again this week as Gazprom negotiated to buy up gas assets in Libya, so tightening its grip on Europe’s jugular.

On the economy, the US Federal Reserve chairman, Ben Bernanke, admitted for the first time that the US might be in recession, with record numbers of Americans likely to require food stamps, evoking echoes of the 1930s that Mr Bernanke tried hard to dampen in his Congressional testimony. In Britain the party line is still that recession will be avoided, though it is hard to see how, as consumers plunder their savings accounts to pay the energy bills.

One of the early victims looks likely to be aviation, which will soon have more to worry about than chaos at Terminal 5. Airlines are already being squeezed by rising energy costs and looming recession, and the open skies agreement promises yet fiercer competition. In these circumstances the industry’s default response to any threat - headlong capacity expansion - seems likely to mean more airlines following Alitalia into probable bankruptcy - or outright failure in the case of Aloha, ATA & Skybus - all in one week. Perhaps that might at least eliminate the idiocy of airlines hiring out-of-work actors to make up their passenger targets.

Trenchant commentary this week comes from Dr Michael Smith of Energyfiles, who puts the recent claims about Colombian heavy oil into context.

Economy
Bernanke admits US is contracting but plays down 'Great Depression'
Householders in a rush to the bank as big price rises empty their wallets
Bank turns away new mortgage customers
ECB injection pledge eases tension
Food Stamp Use at Record Pace as Jobs Vanish

Transport
Low-cost airlines hit by recession and fuel price escalation
Alitalia Nears Bankruptcy as Air France Quits Talks
European take-off for open skies
Green fury as airline pays actors to fly so it can meet quotas

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Editor's NotesThe original at at the ODAC site has links and more commentary. -BA